First Union"We believe that First Union (FTU, NYSE, around...

STOCK WATCH

"We believe that First Union (FTU, NYSE, around $26) has significantly enhanced its franchise value and earnings power as a result of its acquisition of Miami's Southeast Banking Corp.," says Kristina Anderson of Smith Barney.

"First Union is a $40 billion bank holding company based iCharlotte, N.C. The acquisition brings in a sizable credit-card portfolio and the ability to enhance First Union's trust and private banking operations.

"We expect a total return of 25 percent. We rate the stock a buy."

Walt Disney

"Despite short-term problems, Disney (DIS, NYSE, around $113) remains the quintessential franchise. The firm is struggling now and traffic at its theme parks is slow," says Stephen Leeb of Personal Finance in Alexandria, Va.

"However, over the long term, you can't go wrong with this issue. Even if Disney falls 10 percent from its current price, you should be comfortable owning it. The stock has a high price-to-earnings multiple of 23. But in this market environment, even this valuation isn't too high."

Southwest Airlines

"Southwest Airlines (LUV, NYSE, around $25) has held up well in comparison to other airline stocks," says Dow Theory Forecasts of Hammond, Ind.

"The firm continues to win accolades for its capable management and low-cost structure. Recent articles in the national press have focused on the high level of its employee efficiency and loyalty. Southwest has also avoided expanding into areas in which it would probably be uncompetitive. Southwest remains an attractive holding for long-term growth."

USAir Group

"USAir (U, NYSE, around $8) encountered difficulty in absorbing the acquisitions of Piedmont and PSA, just as the economy began to soften and price competition in the industry picked up," says George Putnam, the Turnaround Letter, Boston, Mass.

"As a result, earnings dropped from $5.28 a share in 1987 to a loss of $10.89 per share in 1990. However, the economy seems to be picking up steam again.

"At the same time, USAir is cutting costs and upgrading its fleet of planes. Buy up to $20 a share."